...to Rs 3,069,366 million (Rs 3069.4) billion by end March 2015 (in percentage parlance this decline being 3.21%), total foreign commercial borrowings in the review period however, increased by Rs 87,424 million (87.4 billion) or by 5.31% YoY to Rs 1,557,971 million (Rs 1,511.4 billion).Meanwhile, concessional borrowings in the review period marginally declined by Rs 14,514 million (Rs 14.5 billion) or by 0.95% to Rs 1,557,971 million (Rs 1,558 billion).

http://imf.org’s immediately preceding Resident Representative Dr. Koshy Mathai speaking to reporters prior to his departure in 2013, warned of the dangers in the rise in commercial borrowings, because of, ipso facto, the threat it may cause to the economy when servicing such high debt, with the possibility of international commercial rates once more being on the rise.Sri Lanka, once a recipient of grant and concessional aid from friendly countries, increasingly became reliant on foreign commercial loans from China, consumed with vigour by the previous regime, due to China’s ’no questions asked’ policy.

Some of those projects built with Chinese commercial loans were grey, like building a costly harbour at Hambantota and an international airport at Mattala, where no ships dock and no planes land.

Matters are compounded due to foreign exits from the government securities market and the Colombo bourse, which causes further bludgeoning of the rupee. Sri Lanka is an import dependent economy. Therefore, a weak rupee will cause consumer prices to rise, thereby causing socio-politico instability in the country. Matters are made worse due to inflows drying up.

The ER, as at 31 March, 2014, had had been dealing at the price of Rs 130.70 in the market, virtually in all cases, i.e. whether it be spot, cash, tom or ’spot next’, due to exchange controls imposed by the previous regime.

The ER as at 2.10 pm on Tuesday had had been dealing at Rs 140.50/55 to the dollar in spot prices in two way quotes under a liberalized regime.

Therefore, since 31 March, 2014 to 2.10 p.m. on Tuesday, the ER had had depreciated by between Rs 9.80-9.85, or by between 7.50% to 7.54%.

It were these painful adjustments, like the liberalization of the ER, as being advocated as one of the panaceas, though not said in so many words, economists like Dr. Indrajit Coomaraswamy had been recommending in recent seminars, as an answer to the country’s many economic woes.

Meanwhile, with steps taken by the current regime to mitigate foreign commercial borrowings, March 2015 over December 2014 sharply fell by 4% YoY to Rs 1,557,971 million; while concessional loans grew by 1.4% toRs 1,511, 395 million.

In contrast, when the previous regime was in power, though foreign commercial loans fell by 3.14% or by Rs 52, 577 million to Rs 1,622,138 million; end December 2014 quarter over end September 2014 quarter; concessional loans by Rs 17,207 million or by 1.14% to Rs 1,490, 978 million and overall foreign debt by Rs 69,784 million or by 2.19% to Rs 3,113,116 million; yet the foreign loan mix vis-a-vis foreign commercial debt to foreign concessional debt, was very much in favour of the former.

Foreign commercial debt as a percentage of total foreign debt as at end December 2014 stood at a massive 52.11%, whereas foreign concessional debt was at a low percentage figure of 47.89%.These percentages, quarter on quarter, as at March 2015, however, had seen foreign commercial debt declining to 50.76% and foreign concessional debt rising to 50.76%, which, under the circumstances are positive trends.